International equity markets are having a great 2017 with many indices gaining +20% YTD. Some markets are absolutely on fire; EM Asia is up +39%, BRIC up +37% and broad EM up +32%. While this strong performance is certainly encouraging, our international equity team is a bit confused by the market’s reactions to various geopolitical events around the world. Whether it be the ongoing natural disasters or the ever-increasing political risk, the markets seem unconcerned…which is a bit concerning to us.
Consider, for example, this small sample of event risk that showed up during Q3: